What is a Straw
Borrower?
You don't need to use a gun to rob a bank.
Criminals can do the same with some little know-how.
You could be committing mortgage fraud without even knowing it. Perhaps an acquaintance of yours tells you he's in a financial pickle. He's found a house he really wants to buy but the bank will turn him down because of his bad credit.
He offers you a few thousand dollars to lend your good name and credit to act as the buyer of the property. He assures you he will make the mortgage payments.
The mortgage is issued and your friend moves into the house and - you assume - makes the mortgage payments.
Did you know that you can go to jail for letting someone use your name to falsely obtain a mortgage? Some people apparently don't know.
So, a straw borrower is a person who consents to use their name, personal details and their credit to be used for the purpose of obtaining a mortgage loan with no intention of ever using or living in the house. Sometimes a Straw borrower will be offered a payment for the use of their credit.
Why is this illegal if the mortgage gets paid? Because of RISK posed to the lender. You make false statements to lower the perceived risk and therefore commit mortgage fraud by making false statements that you intend to occupy the property to the lender at the time of application.
Buyers beware.
For more information
contact us at
416-920-9931 or
mortgages@eddiemac.ca
Visit us online at www.eddiemac.ca
Your Toronto
Mortgage Broker
637 College
Street, Suite 201, Toronto ON, M6G 1B5
